ACCC gives green light to Telstra separation

The Australian Competition and Consumer Commission (ACCC) has given the National Broadband Network (NBN) its tick of approval with the acceptance of Telstra’s Structural Separation Undertaking (SSU) and draft migration plan.

Australia’s number on telco submitted the SSU and draft migration plan to the ACCC in August, which commits Telstra to structurally separate by 1 July 2018. It also maps out the measures Telstra will put in place to provide transparency and equivalence in the supply of services to wholesale customers during the transition to the NBN.

ACCC chairperson, Rod Sims, said the acceptance of the SSU marked a significant milestone in the structural reform of the telecommunications sector.

"This SSU has been the subject of extensive consultation and public discussion. The ACCC acknowledges contributions from industry, as well as the preparedness of Telstra and NBN Co to modify the undertaking in response to legitimate concerns,” he said in a statement.

The telco submitted its final SSU to the watchdog recently, to address concerns raised by the watchdog. Changes included clarification on the operation of the overarching pricing equivalence commitment, and also how wholesale customers access reference prices for regulated services.

"In particular, Telstra has made substantial improvements to its interim equivalence and transparency commitments, which are intended to ensure that wholesale customers gain access to key input services on an equivalent basis to Telstra's retail business units during the transition to the National Broadband Network."

In the SSU approval document released by the ACCC, the regulator said the SSU specified a range of measures to apply to Telstra’s supply of fixed line access services to its wholesale customers.

“Of particular significance is the commitment that Telstra has given to providing equivalent outcomes for wholesale customers as are achievable by Telstra’s retail businesses.

“The inclusion of this commitment provides additional assurance that the equivalence and transparency measures will remain appropriate and effective for the duration of the migration period.

“The SSU also specifies measures that will enable the ACCC to monitor Telstra’s compliance with its various commitments.”

Telstra has also sought to renegotiate existing wholesale ADSL contracts following the watchdog’s recent interim access determination if requested by a wholesale customer. The interim wholesale price will be in place for 12 months, as a final access determination is established.

According to Sims, NBN Co and Telstra have also addressed some issues regarding commercial arrangements, with restrictions on Telstra promoting wireless services as a substitute for fibre services replaced with a requirement that it meet existing Australian consumer law requirements.

“Any subsequent amendments to the commercial arrangements that would restrict either party from competing will now be subject to ACCC oversight – this is effected by a joint undertaking that NBN Co and Telstra have given to the ACCC.”

Telstra chief executive, David Thodey, said the telco could now work with the government to finalise the processes to implement the definitive agreements.

“There are a small number of matters left to finalise with the Government, including NBN Co shareholder approval and Telstra receiving Ministerial waivers from the legislative requirement to divest our HFC network and our share in FOXTEL,” Thodey said in a statement.

“The SSU comes into force once these waivers are received,” Mr Thodey said.

Both the SSU and migration plan will become effective once the Minister has exempted Telstra from the requirement to give undertakings on its subscription television broadcasting licence and its hybrid fibre-coaxial (HFC) network.

There will be a two month period for the telco to implement interim equivalence and transparency measures before they become enforceable.

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